Question: I am concerned about my shares of Safeway Inc. and wonder how the company is going to hold up against all of its competition. L.D., via the InternetAmswer: While the logic behind investing in the stock of grocery chains has always been that people must eat, the business of selling food has definitely become more competitive.The nation’s third-largest retail grocery chain, with about 1,700 stores in the US and Canada, enjoys impressive economies of scale. It has a network of distribution centres, plus more than 30 manufacturing facilities that process one-fourth of its private-brand products.It has done a fine job of developing its private brands, with O Organics and Eating Right being notable examples. Considerable money was spent to modernise stores to emphasise a feeling of quality. Recent capital spending reductions increased its already healthy cash flow, and it continues to gradually buy back stock.That’s the good news. Besides the inevitable impact of the economy, the primary concern for investors about Safeway stock is that everyone seems to want to get into the grocery business.In addition to traditional grocery competitors, Safeway must do battle with low-priced operators such as Wal-Mart, Costco, Target and Family Dollar Stores Inc., as well as drug stores such as Walgreen Co. and CVS Caremark Corp. That means a less certain future for grocers and more modest earnings prospects than in the past.Safeway (SWY) shares are up two percent this year following a decline of 10 percent last year and a drop of 31 percent in 2008. Third-quarter earnings declined five percent, and sales slipped a fraction of a percent.The firm reduced its earnings guidance for the full year to the lower end of its earlier predictions. Its price per item has declined following a high-visibility price-cutting campaign that began in the second half of last year.Consensus analyst recommendation on Safeway shares is “hold,” according to Thomson Reuters, with diverse ratings consisting of two “strong buys,” four “buys,” seven “holds,” five “underperforms” and two “sells.”Safeway’s primary markets include the western US, western Canada, Texas and the Mid-Atlantic region. There has been stability at the top of the company, with Steven Burd as the CEO since 1993.Earnings are expected to decline 12 percent this year and increase 13 percent next year, according to Thomson Reuters. The long-term growth rate is projected to be 12 percent versus the 22 percent estimated for the grocery industry.Q. I am thinking of investing in a balanced mutual fund and would like to know your thoughts on American Funds American Balanced, which was recommended. P.F., via the InternetA. It follows a virtuous path of quality stocks and bonds that appeal primarily to investors who don’t like surprises.Balanced funds by definition mix stocks and bonds in order to iron out investment volatility. This fund throws in reasonable expenses as well. That it has amassed $49 billion in assets indicates that many investors have found just what they want.American Funds American Balanced (ABALX) gained 11 percent over the past 12 months and has a three-year annualized return of less than one percent. Both results rank at the midpoint of moderate allocation funds.Its 10-year annualised return of six percent places it in the top 10 percent of its peers.“This fund has been doing OK not great and not awful over the past three to five years but does have a very strong long-term record that investors should note,” said Kevin McDevitt, mutual fund analyst with Morningstar Inc. in Chicago. “It is a big fund that I would consider for a core holding for investors because it is not very volatile.”The management team has deep experience. All seven managers have been with American Funds for more than 15 years, and they are backed by a seasoned analyst team. The company consistently has been able to hire and retain quality managers and analysts.About 65 percent of the portfolio is in stocks and about 31 percent in bonds, according to Morningstar. It has more than 100 stock holdings, mostly blue-chip. There are more than 400 bonds, three-fourths of them AAA in quality, though there are also some lower-quality issues.Industrial materials comprise nearly one-fifth of the stock portfolio, with other concentrations in financial services and health care. Top holdings were recently US Treasury notes and bonds, Chevron Corp., Wells Fargo Co., Philip Morris International Inc., Royal Dutch Shell Plc, Home Depot Inc., Microsoft Corp. and AT&T Corp.This 5.75 percent “load” (sales charge) fund requires a $250 minimum initial investment and has an annual expense ratio of 0.67 percent.Question: Are there any negatives to using a debit card? Do I get the same protection as with a credit card? M.F., via the InternetA. The fraud protection of a debit card is the same as a credit card, yet there are differences in the process.“If there is a fraudulent charge on a debit card, that money has already come out of your checking account,” said Greg McBride, senior financial analyst with Bankrate.com, North Palm Beach, Fla. “So you have the hassle of getting the money back in.”The fraudulent charge on your debit card may have overdrawn your account. Typically, the card issuer, which is usually your bank, will cover overdrawn cheques and waive fees until the money is back in your account, he said.If you order something online that arrives damaged, a credit card provides better protection.“With a disputed purchase using a credit card, the card company acts as your advocate,” said McBride. “It issues a charge back to the merchant, and the cardholder doesn’t pay the charge while it is being disputed.”With a debit card you must deal directly with the merchant because the money has already come out of your checking account, he concluded.l Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 N. Central Ave., Suite 302, Phoenix, Ariz. 85004-1248, or by e-mail at andrewinv(at)aol.com.